Saturday, August 27, 2011

Steve Jobs: American Manufacturing Icon at One of the Most Successful Manufacturing Firms in History

American manufacturing of computer equipment reached an all-time record high in July.

Following the announcement on Wednesday night of his resignation as Apple CEO, Steve Jobs has been receiving lots of well-deserved praise and accolades for his entrepreneurial genius at Apple, one of the most successful, profitable and valuable manufacturing firms in the history of the world. That's right, we shouldn't forget that Apple, Inc. (NAICS Code 3341: Computer Manufacturing) is part of the American manufacturing sector , a sector that the Boston Consulting Group predicts is headed for a renaissance.

Given Apple's escalating success under the leadership of Jobs, especially in recent years, perhaps Apple and Jobs have already helped launch the renaissance of American manufacturing. And when we think of Steve Jobs, we should be sure to remember that at his core, he's an American manufacturing icon, genius and titan. As much as we hear the never-ending media narrative that "America doesn't make anything anymore," or that "American manufacturing just can't compete globally anymore," Apple's success clearly demonstrates that the narrative is false.

For example, Apple and its domestic competitors in the U.S. computer industry (Dell, H-P, Microsoft, IBM, Cisco, Intel, etc.) are all world-leaders, and collectively produced more output last month than ever before in history (see chart above of the Federal Reserve's monthly production index for computer and peripheral equipment). And it's a remarkable fact that U.S. manufacturing output of computer equipment has doubled in less than six years since 2005, after doubling previously in just seven years. So much for the claim that "we don't make anything anymore."

Bottom Line: When we celebrate the genius of Steve Jobs and the success of Apple Computers, we should remember that we are also celebrating the success of American manufacturing. Simply put, Steve Jobs and Apple prove that American manufacturing is not dying, but is very much alive and well.

President Obama is reconsidering a plan to allow millions of homeowners with government-backed mortgages the ability to refinance their mortgage at historically low rates.

Despite historic lows for mortgage rates, many borrowers are unable to refinance their high-rate mortgage because their credit history is blemished or they do not have enough equity in the home for the lender to make a new loan under today's stricter standards.

The plan could save millions of homeowners hundreds or even thousands of dollars every month, potentially unleashing consumers with extra money to spend on other items. That would boost the economy and create jobs as demand for goods and services increase, backers of the plan say.

From another article:

Such a proposal would meet opposition from investors in government-backed mortgage bonds, as well as the regulator who oversees Fannie Mae and Freddie Mac.

Looks like someone already beat me to this comment..... Apple is a great engineering and design company, but manufacturing seems to be subcontracted out to other companies, many of them overseas. As of 2007, the following manufacturers had a hand in the iPhone:

i completely agree with your assessment that nearly all the value of apple products is created in the US, but i'm not sure i'd call them a "manufacturing" company.

they have very deliberately stayed away from high capital, low margin businesses like manufacturing.

that is why they have been so successful.

apple is not a manufacturer. they are a platform company.

this same trend has been going on in most of us technology.

cisco and ibm are the same was.

so are most of our high tech smeiconductor companies like PMC sierra who design telecom IC's, but do not own any fabs.

(intel is a notable exception as they are pushing the technology curve too hard and have needs to specific and proprietary to outsource fabrication)

but, andy grove aside, these are not manufacturing companies. they are post manufacturing companies. they create the value (and make the profits) but are successful because they left manufacturing, not because they participate in it.

This is how the company describes its manufacutring efforts in its latest 10Q report:

"Substantially all of the Company’s iPhones, iPads, Macs, iPods, logic boards and other assembled products are manufactured by outsourcing partners, primarily in various parts of Asia. A significant concentration of this outsourced manufacturing is currently performed by only a few outsourcing partners of the Company, often in single locations."

So, manufacturing is not the category that this firm fits. Is it the leading designer and marketer of innovation in the world? Yes.

Finally, Table 1 shows that in percentage terms, the Hoover administration undertook a massive increase in federal spending after the 1929 stock market crash and the onset of the Great Depression. From 1929 to 1933 (the final Hoover budget), nonmilitary federal expenditures increased by 259 percent. Total expenditures increased by a more modest 188 percent during that period because military expenditures were, in 1929, more than half of the federal budget. In percentage terms, growth in federal spending in the Hoover administration far outpaced the growth during FDR's administration.

"Well, since you're going to be condescending about it, Morgan, I took your advice. This is the first thing that popped up.

In its fiscal year 2010, ending in September, Apple reported income of $18.5 billion and paid $2.7 billion in income taxes, or about 15 percent.

Linky-poo"

An opinion piece? What's the source? You have to do better than that.

"Look, my whole argument is "to lower the Corporate Tax Rate."

What happened to "Make them pay!"

"Perhaps if the Corporate Tax Rate was something reasonable (say, 15%) Companies such as Apple might do a little manufacturing HERE. We need the jobs."

But you quoted that opinion piece, claiming that Apple paid 15% tax. If that's a "reasonable" rate, why don't they manufacture in this country already?

Articles like the one you linked to should make you laugh, as it did me. The whole idea of taxing corporations at all, is a cruel political trick to make you think you are paying a smaller percentage of the total tax, and you have fallen for it completely.

Corporate taxes are ultimately paid by three groups: Consumers, as higher prices; stockholders, as lower dividends and lower stock values; employees in the form of lower wages or higher unemployment.

It was "assembled in China" (less than 10% of the value) but designed, marketed and sold in America.

That's all well and good -- and I'm not one of those who thinks we don't make anything here anymore. Nonetheless, we must, somehow, force the Federal government to balance its budget, cut regulations and taxes on capital and stop the Fed from inflating the currency.

NAICS was just revised and updated in 2007 to reflect changes in the industrial composition in the economy. Apple manufactures lots of consumer and computer products, check its website for a list of its durable, manufactured goods. Assembly make take place elsewhere, but it's a manufacturing company but all commonly accepted standards and measures of industry classification.

>> Yes, but I have a question: Why does my Apple Notebook say "Made in China"?

Because, Benji, as Dr. Perry notes, it doesn't matter how many times he explains the term means less in an IP & Services economy (to translate it) than it does in a manufacturing economy, you Still Refuse To Get It.

He's been over this a half dozen times in the last year or so. Yet you still think those three words matter far more than they do.

BoaB -- that's one way to look at it. As I note above -- we're not in a manufacturing economy any more. We're the world's first IP & Services economy. All significant future wealth will be derived from providing IP and Services, and margins on manufacturing will get slimmer and slimmer until there is no real money to be made unless you're a huge conglomerate doing the job. This mirrors what happened in Ag over the last century+, with the "small farm" mostly pushed out of existence (and would long since have been phased out were it not for price supports and the like). In the end, 3-5% of the nation's population will be behind the production of all the nation's mfr goods, just as 3-5% of the us pop is involved in the production of its food.

That's a piece of the dislocation here, as more and more of the population needs to be retrained to get out of mfring. These stupid calls for more mfr jobs are wrongheaded in the extreme, they attempt to prevent/deny a process that is already underway. It started in the 70s and created the Rust Belt, eased off, and now it's entering the home stretch.

Manufacturing is D-A-Y-E-D -- *dead*.

>>> An opinion piece? What's the source? You have to do better than that.

No he doesn't.

That's the Dufus Way.

Link to "anything that says what he wants to believe, take it as Gospel".

If he wanted to claim there was no racial tensions in the USA, and he found an article on the American Nazi Party's website that said that, he'd link to it.

You are all arguing about if Apple is a manufacturing company or not, who cares. The part that bothers me is the assertion that this is American manufacturing. If they aren't paying Americans, in America to actually build and or assemble the little parts, then they are not American Manufacturing jobs. The correct headline might be, American Manufacturing company makes billions by shipping it's jobs over seas.